The main chemical intermediates and derivatives of phenol are bisphenol-A (BPA), which is used to make polycarbonate (PC) and epoxy resins, phenolic resins, caprolactam, alkylphenols, aniline and adipic acid.
The largest market for phenol is BPA which accounts for around 45% of demand. The BPA market has been driven by the strong growth in polycarbonate resins, accounting for two-thirds of BPA demand.
The driving force in polycarbonate demand has been growth in optical media such as compact discs (CDs), CD-ROMs, recordable CDs and digital versatile discs (DVDs). The growth in optical media is slowing significantly as it is being replaced by MP3 players, high internet bandwidth and USB drives. Long term growth in polycarbonate is still expected in other sectors such as alloys used in automotive and electronic products, cell phones, TVs, business equipment and sheet and construction products.
US based-consultant CMAI forecasts that global polycarbonate demand will slow from the 8-9%/year seen at the beginning of the decade to 5%/year over the next few years.
BPA’s other main derivative is epoxy resins which are used in high performance coatings, electrical-electronic laminates, adhesives, flooring and paving applications, and composites. The economic downturn will have impacted epoxy resin markets but long term growth is expected to be 3%/year globally.
The second largest outlet for phenol accounting for 28% of demand is phenolic resins which are largely used as durable binders and adhesives in structural wood panels and as binders in mineral wool insulation. They have a wide spectrum of uses in the automotive and construction industries including brake linings, foundry binders, insulation foams and composites. With growth linked to GDP activity, the economic downturn and decline in the construction sector has hit phenolic resins markets but long term global growth of 3%/year is expected.
Caprolactam is the next largest consumer of phenol and is used mainly to make nylon 6 fibres, engineering resins and film. Growth in the fibre sector is stagnant but it is much more robust in engineering resins which are replacing metals in automobiles. Long-term global growth in caprolactam is 2-3 %/year with higher rates experienced in Asia.
Strong growth is projected for the use of phenol in polyphenylene oxide engineering resins, via ortho-xylenol. However, this is a small market for phenol.
Since 2001, phenol demand has been growing at an average of 5%/year due to healthy growth for BPA driven by polycarbonate as well as epoxy resins. CMAI expects global phenol demand to continue to grow at an average of 4%/year in the 2008-2012 period.
However, the phenol industry is adding capacity at a faster rate than the growth in demand. Borealis, Ertisa and Ineos Phenol added a total of 450,000 tonnes/year capacity in Europe in 2007 and 2008. In China, Kingboard started up a 125,000 tonnes/year plant in 2008 and large amounts of new capacity are planned for 2009 and 2010. This new capacity will lead to lower operating rates that could hit the industry’s profitability.
In the US, phenol demand is being adversely affected by the general economic slowdown and downturn in housing construction. The phenolic resin sector, in particular, has been hit by the slump in the US housing market. The slowing economy has also softened BPA demand in all its application sectors.
Assuming an economic correction begins by mid- to late-2009, phenol demand growth in the US is projected to be 2%/year through to 2011, according to ICB. US demand will grow from 1.97m tonnes in 2007 to 2.13m tonnes in 2011. Exports in 2007 were 502,000 tonnes.
Updated: December 2008. Sources: ICB Chemical Profile, 17 November 2008; 2008 CMAI World Petrochemical Conference, 26-27 March 2008, Houston, Texas.
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Phenol
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Phenol was first isolated from coal tar in the coking of coal, but the first commercial process was the sulphonation of benzene and subsequent fusion with caustic soda.
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